The economist, actor, comedian and
commentator is still best known by many for his unanswered roll call of
“Bueller? ... Bueller?”
in the 1986 film “Ferris Bueller’s Day Off.”

For investors, his best line these days can be summed up as: Diversify! Diversify! Beyond the usual stocks and bonds, that
is.

After many suffered through years of
up-and-down performance with a traditional approach, Stein says it’s
time to move beyond
conventional thinking. That can mean investing in anything from
REITs (real estate investment trusts) and futures to mutual
funds that follow more arcane strategies, as outlined in “The
Little Book of Alternative Investments.” It’s the latest title
he co-authored with investment adviser Phil DeMuth.

As well as a quest for better returns, the idea is to protect yourself against the next market collapse.

“It’s about diversifying yourself so much that if there is a crash or a very serious correction, you won’t be killing yourself
in the middle of the night with fear and anger and self-loathing,” he says.

“You’ll be able to sleep through the night.”

Stein commented about the economy,
alternative investments, the markets and other topics in a recent
interview with The Associated
Press. Here are excerpts:

Q: What’s your prognosis for the economy?

A: I think the recovery will continue. There’s some question about whether or not the end of stimulus spending will be a big
problem. But since we didn’t really seem to notice much upward movement as a result of the stimulus, it’s hard to believe
there will be a lot of downward movement when the stimulus is removed.

Q: As first-quarter earnings season unfolds, do you see corporations

continuing on the same upward path that they’ve been on lately?

A: I think they can keep squeezing out profits and maybe even profit growth, but not at the same rate. The rate since the first
quarter of 2009 has been unparalleled.

Q: How optimistic are you about prospects of a settlement in Washington to help get us out this fiscal mess long-term?

A: There has to be a solution to it. I
think we’re getting to the point where they just cannot keep avoiding
it. They’ll try,
because the Republicans will not want to raise taxes and the
Democrats have a lot of interest groups that they want to protect.

If I may say this (Stein is a Republican), the Republicans in particular just absolutely have to get over this idea that it’s
unholy to raise taxes. It’s NOT unholy to raise taxes. In periods of fiscal emergency, it is necessary to raise taxes, and
I think we’re approaching a time when it’s an absolute necessity.

Q: Why should average investors dare to be different, as you put it in the book, by venturing into alternative investments
such as futures, and mutual funds that model hedge funds?

A: By buying these investments, you will be spreading out your risk among them.

If you have everything in the stock market
and the market moves drastically against you, the temptation is to get
out while
you still have something left. Whereas, if you have lots and lots
of diversification so that any movement in the stock market
does not drastically affect your net worth, you can stay in longer
and then reap the benefits when the market recovers.

Q: Aren’t most investors going to be afraid of these investments, or find them too much work to research?

A: It’s partially fear, but partially
the fact investors don’t know what they are. We give a long list in our
book of mutual
funds that have strict SEC regulation that mimic the performance
of different vehicles in the world of hedge funds. Putting
money in some of these funds as diversifiers is a very good idea.

If that’s too scary, then Phil and I
recommend just having your portfolio in VTI (Vanguard Total Stock Market
ETF), which
is a worldwide index fund. It pretty much has a little bit of
everything. Just put 70 percent in that — or 60 percent if you’re
a little bit older — and 30 percent in cash or short-term
Treasuries.

Q: What commodities should individual investors focus on? Is gold still a smart buy at more than $1,500 an ounce?

A: I don’t recommend that the small individual investor buy individual commodities at all.

I’ve been a pessimist on gold, and I still don’t think gold deserves to be at the price it’s at. I just don’t see why it is
considered so valuable. It earns no interest. It’s just a passive, inert metal. It’s like an obsession, it’s like a mania,
to have it. And I don’t see what the value is.